Organizational Health

Overview

Organizational health is about making a company function effectively by building a cohesive leadership team, establishing real clarity among those leaders, communicating that clarity to everyone within the organization and putting in place just enough structure to reinforce that clarity going forward.

The advantage of organizational health is undeniable and massive. Companies get more done in less time. They avoid losing their best people. They identify problems earlier and solve them faster. They beat rivals who waste time, money and energy fighting among themselves, which ultimately drives away good employees and customers.

Comprehensive Check List

Members of a leadership team can gain a general sense of their organization's health, and more important, identify specific opportunities for improvement by completing the following checklist:

Discipline 1: Build a Cohesive Leadership Team

The leadership team is small enough (three to ten people) to be effective.

Members of the team trust one another and can be genuinely vulnerable with each other.

Team members regularly engage in productive, unfiltered conflict around important issues.

The team leaves meetings with clear-cut, active, and specific agreements around decisions.

Team members hold one another accountable to commitments and behaviors.

Members of the leadership team are focused on team number one. They put the collective priorities and needs of the larger organization ahead of their own departments.

Discipline 2: Create Clarity

Members of the leadership team know, agree on, and are passionate about the reason that the organization exists.

The leadership team has clarified and embraced a small, specific set of behavioral values.

Leaders are clear and aligned around a strategy that helps them define success and differentiate from competitors.

The leadership team has a clear, current goal around which they rally. They feel a collective sense of ownership for that goal.

Members of the leadership team understand one another's roles and responsibilities. They are comfortable asking questions about one another's work.

The elements of the organization's clarity are concisely summarized and regularly referenced and reviewed by the leadership team.

Discipline 3: Overcommunicate Clarity

The leadership team has clearly communicated the six aspects of clarity to all employees.

Team members regularly remind the people in their departments about those aspects of clarity.

They leave meetings with clear and specific agreements about what to communicate to their employees, and they cascade those messages quickly after meetings.

Employees are able to accurately articulate the organization's reason for existence, values, strategic anchors, and goals.

Discipline 4: Reinforce Clarity

The organization has a simple way to ensure that new hires are carefully selected based on the company's values.

New people are brought into the organization by thoroughly teaching them about the six elements of clarity.

Managers throughout the organization have a simple, consistent, and nonbureaucratic system for setting goals and reviewing progress with employees. That system is customized around the elements of clarity.

Employees who don't fit the values are managed out of the organization. Poor performers who do fit the values are given the coaching and assistance they need to succeed.

Compensation and reward systems are built around the values and goals of the organization.

Meetings

Tactical and strategic discussions are addressed in separate meetings.

During tactical staff meetings, agendas are set only after the team has reviewed its progress against goals. Noncritical administrative topics are easily discarded.

During topical meetings, enough time is allocated to major issues to allow for clarification, debate, and resolution.

The team meets quarterly away from the office to review what is happening in the industry, in the organization, and on the team.

Organizational Health Survey

Take this quick organizational health survey based on Patrick Lencioni's best-selling book, The Advantage: Why Organizational Health Trumps Everything Else in Business, and get a snapshot of your organization's overall health, as well as advice on how to start addressing this critical question.

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Summary Article

The Last Competitive Advantage

No, those disciplines have not disappeared. They are all alive and well in most organizations. And that’s good, because they’re important. But as meaningful competitive advantages, as real differentiators that can set one company apart from another, they are no longer anything close to what they once were.

That’s because virtually every organization, of any size, has access to the best thinking and practices around strategy, technology and those other topics. In this age of the internet, as information has become ubiquitous, it’s almost impossible to sustain an advantage based on intellectual ideas.

However, there is one remaining, untapped competitive advantage out there, and it’s more important than all the others ever were. It is simple, reliable and virtually free. What I’m talking about is organizational health.

The Healthy Organization

A healthy organization is one that has all but eliminated politics and confusion from its environment. As a result, productivity and morale soar, and good people almost never leave. For those leaders who are a bit skeptical, rest assured that none of this is touchy-feely or soft. It is as tangible and practical as anything else a business does, and even more important.

Why? Because the smartest organization in the world, the one that has mastered strategy and finance and marketing and technology, will eventually fail if it is unhealthy. Trust me, I’ve seen it happen again and again. But a healthy organization will always find a way to succeed, because without politics and confusion, it will inevitably become smarter and tap into every bit of intelligence and talent that it has.

So if all this is true – and I am absolutely convinced that it is – then why haven’t more companies embraced and reaped the benefits of organizational health? For one, it’s hard. It requires real work and discipline, over a period of time, and it must be maintained. On top of that, it’s not sophisticated or sexy. That means it doesn’t excite a group of executives who are looking for a quick fix or a silver bullet, something that they will be reading about in the Wall StreetJournal or Bloomberg Businessweek. Moreover, in spite of it’s power, organizational health is hard to measure in a precise, accurate way. It impacts so many disparate areas of an enterprise that it is virtually impossible to isolate it as a single variable and quantify its singular impact on the bottom line.

But the biggest reason that organizational health remains untapped is that it requires courage. Leaders must be willing to confront themselves, their peers, and the dysfunction within their organization with an uncommon level of honesty and persistence. They must be prepared to walk straight into uncomfortable situations and address issues that prevent them from realizing the potential that eludes them.

The Four Disciplines

What exactly does an organization have to do to get healthy? There are four simple – but again, difficult – steps. They include:

Build a Cohesive Leadership Team - The first is all about getting the leaders of the organization to behave in a functional, cohesive way. If the people responsible for running an organization, whether that organization is a corporation, a department within that corporation, a start-up company, a restaurant, a school or a church, are behaving in dysfunctional ways, then that dysfunction will cascade into the rest of the organization and prevent organizational health. And yes, there are concrete steps a leadership team can take to prevent this.

Create Clarity - The second step for building a healthy organization is ensuring that the members of that leadership team are intellectually aligned around six simple but critical questions. Leaders need to be clear on topics such as why the organization exists to what its most important priority is for the next few months, leaders must eliminate any gaps that may exist between them, so that people one, two or three levels below have complete clarity about what they should do to make the organization successful.

Over-Communicate Clarity - Only after these first two steps are in process (behavioral and intellectual alignment), can an organization undertake the third step: over-communicating the answers to the six questions. Leaders of a healthy organization constantly – and I mean constantly – repeat themselves and reinforce what is true and important. They always err on the side of saying too much, rather than too little. This quality alone sets leaders of healthy organizations apart from others.

Reinforce Clarity - Finally, in addition to over-communicating, leaders must ensure that the answers to the six critical questions are reinforced repeatedly using simple human systems. That means any process that involves people, from hiring and firing to performance management and decision-making, is designed in a custom way to intentionally support and emphasize the uniqueness of the organization.

In addition to these four steps, it is essential that a healthy organization get better at the one activity that underpins everything it does: meetings. Yes, meetings. Without making a few simple but fundamental changes to the way meetings happen, a healthy organization will struggle to maintain what it has worked hard to build.

Can a healthy organization fail? Yes. But it almost never happens. Really. When politics, ambiguity, dysfunction and confusion are reduced to a minimum, people are empowered (oh, I hate to use that word!) to design products, serve customers, solve problems and help one another in ways that unhealthy organizations can only dream about. Healthy organizations recover from setbacks, attract the best people, repel the others, and create opportunities that they couldn’t have expected.

At the end of the day, at the end of the quarter, employees are happier, the bottom line is stronger, and executives are at peace because they know they’ve fulfilled their most important responsibility of all: creating an environment of success.

Getting Started Road Map

Glossary of Key Terms

Accidental values: The traits that are evident in an organization, but which have come about unintentionally, and which don't necessarily serve the good of the organization.

Administrative or daily check-ins: A gathering once a day, for no more than ten minutes, to clear the air about anything administrative that would be helpful to know. There are no agendas and no resolution of issues, just an exchange of information.

Adrenaline addiction: The unwillingness and/or inability of busy people to slow down and review, reflect, assess, and discuss their business and their team. An adrenaline addiction is marked by anxiety among people who always have a need to keep moving, keep spinning, even in the midst of obvious confusion and declining productivity.

Advocacy and Inquiry: The two types of communication that must exist among a team. Advocacy is the statement of a belief or position. Inquiry is the active and open-minded questioning of a person's underlying rationale or intent. These concepts were originally developed by Chris Argyris.

Aspirational values: The characteristics that an organization wants to have, wishes it already had, and believes it must develop in order to maximize its success in its current market environment. These are the qualities that an organization is aspiring to adopt, and which it will do its best to manage intentionally into the organization.

Business definition: An unsexy, one sentence description of what an organization actually does. No flowery adjectives or adverbs. Nothing ethereal or abstract.

Buy-in: The achievement of honest, emotional and unwavering emotional support.

Cascading communication: The activity following a meeting in which team members go to their respective departments and report on the agreed-upon decisions and outcomes. Cascading communication should take place in a timely manner following a meeting (one or two days), and occur face-to-face or live on the phone to facilitate the questions and answers.

Collective results: The idea of having goals that are shared by a team, and that transcend departments and/or functional areas.

Commitment: The achievement of clarity and buy-in by a team around a decision, without hidden reservation or hesitation. Even when teams initially disagree about a decision, by engaging in productive conflict, they can eventually agree to a single course of action, confident that no one on the team is quietly harboring doubts.

Commitment clarification: The process that takes place at the end of a meeting during which the team explicitly describes and settles on the agreements and decisions that have been made so that there is no room for ambiguity in what they subsequently do and say.

Conflict continuum: The spectrum depicting the full range of conflict in an organization, from artificial harmony (zero conflict) to aggressive and destructive politics (extreme conflict). At the middle of the continuum is the point where conflict changes from constructive and ideological to destructive and personal.

Conflict norm: Rules of engagement for dealing with conflict within the team. Having clear standards of behavior allows a team to focus on the discussion of issues without having to slow down to think about what is and is not appropriate.

Core purpose: An idealistic description of why an organization exists.

Core values: A set of values (two or three) that is simply inherent in an organization. They lie at the heart of the organization's identity, do not change over time, and must already exist.

Defining objectives: The general categories of activity that are required in order to achieve the thematic goal. Like the thematic goal, defining objectives must be qualitative, temporary, and shared by the team.

Disagree and commit: The ability of team members to hold different opinions about an issue or decision and still actively support whatever final decision is made by the leader or the team as a whole.

Enter the danger: The act of stepping squarely into the middle of a difficult issue. Leaders who overcome their need to avoid uncomfortable situations and enter the danger often defuse a potentially harmful issue and achieve quicker resolution.

Fundamental attribution error: The tendency to falsely attribute the negative behaviors of others to their character (an internal attribution), while attributing one's own negative behaviors to environmental factors (an external attribution). The fundamental attribution error often creates misunderstanding and distrust among team members. By getting to know one another better and understanding personal histories and personality tendencies, team members can often avoid this problem.

Leadership team: A small group of people who are collectively responsible for achieving a common objective for their organization.

Lightning round: The activity at the beginning of a meeting during which team members take thirty seconds to report on their key priorities for the week.

Organizational health: An organization has integrity - is healthy - when it is whole, consistent and complete, when its management, operations, strategy and culture fit together and make sense.

Peer-to-peer accountability: The act of team members' calling one another on behavioral or performance-related shortcomings.

Permission-to-play values: The minimum behavioral standards that are required in an organization. They don't serve to clearly define or differentiate an organization from others. Values that commonly fit into this category include honesty, integrity, and respect for others.

Personal histories exercise: A quick exercise where we ask team members to briefly share a few things about their lives. Team members will explain three things: where they grew up, how many kids were in their family, and what was the most difficult or important challenge of their childhood (but not their inner childhood; just the most important challenge of being a kid!).

The playbook: A document that captures the answers to the six critical questions in a concise, actionable way so that they can use them for communication, decision-making, and planning going forward.

Productive ideological conflict: Passionate, unfiltered debate around issues that are of importance to a team. It is limited to concepts and ideas, and avoids personal attack.

Quarterly off-site: Where the leadership team steps back and revisits the four disciplines: team, clarity, communication and human systems.

Real-time permission: The concept whereby a leader or facilitator interrupts a team member in the midst of healthy debate to reinforce the behavior. Real-time permission is best used when team members are not yet comfortable with conflict, and need to be reminded of its importance so that they can avoid unnecessary feelings of inappropriateness.

Scoreboard: A tool for displaying a team's areas of focus and evaluation of momentary success.

Self-oriented distractions: Obstacles that prevent an individual from adhering to team goals because of concerns that are not necessarily relevant to the larger team. Self-oriented distractions include ego, money/ and career advancement, and budget and departmental needs.

Standard operating objectives: The ongoing and relatively straight forward metrics and areas of responsibility that a leadership team must maintain in order to keep an organization afloat.

Strategic anchors: The primary decisions that provide the filter or the lens through which every other decision must be evaluated.

Strategic meeting: A meeting to dig into the critical issues that can have a long term impact on an organization, or that require significant time and energy to resolve.

Strategy: The collection of intentional decisions an organization makes to give itself the best chance to succeed and differentiate from competitors.

Supporting objectives: The components of a thematic goal, which are collectively owned by the team and often comprise part of its scoreboard.

Tactical staff meeting: A weekly meeting to review progress against goals. This meeting is meant to resolve only tactical obstacles and issues.

Team effectiveness exercise: A process by which a team gives face-to-face feedback to one another, focusing on a single area of strength and a single area of weakness.

Team number one: The concept embodied by the notion that team members must prioritize the team that they are a member of over the team that they lead or manage.

Teamwork: The state achieved by a group of people working together who trust one another, engage in healthy conflict, commit to decisions, hold one another accountable, and focus on collective results.

Thematic goal: The overarching priority of a team during a given period of time. It serves as a rallying cry for the team, and often helps align other parts of the organization.

Unique identity: When an organization knows what it does, why it does it, and how it behaves in the process. The combination of these three elements will never be the same in one organization to the next.

Vulnerability-based trust: The state achieved by a team whose members are comfortable being open with one another, leaving no room for suspicion or fear of retaliation. Team members who achieve vulnerability-based trust are comfortable being exposed to one another around their failures, weaknesses, even fears.